Do You Think India Can Become The Largest EV Market?

Electric Vehicles are revolutionizing the world of road transport. The EV market was impacted by the COVID19 outbreak due to supply chain disruptions and the halt of manufacturing units due to lockdowns and travel restrictions, but it is expected to bounce back globally.

India lags behind other key markets such as China, Europe & the US. But EVs are of great interest in India. Reduction of oil imports and reducing air pollution are the key aims of our EV policy. While less than 0.5% of Indian car sales in 2019 were EVs, the sales figure here is not the right indicator to judge the country’s readiness or interest. India sold 69,000 units in 2017-2018 and about 143,000 units in 2018-2019. This indicates a strong growth rate that is likely to accelerate in the future. A vast majority of all-electric vehicles sold in India were 2-wheelers.

The Indian Electric Vehicle Market was valued at USD 5 billion in 2020, and it is expected to reach USD 47 billion by 2026, registering a CAGR of above 44% during 2021-2026.

Tech giant Foxconn announced its entry into the electric vehicle space and is looking to manufacture its EVs in India, Brazil and Europe. American electric vehicle maker Tesla is also looking to manufacture its vehicles in India. It incorporated its subsidiary, Tesla India Motors and Energy Pvt. Ltd, in Bangalore. However, the issue of high import duty on cars is delaying Tesla's full entry into India.

The Indian government announced the ‘Faster Adoption and Manufacturing of Electric Vehicles’ scheme (FAME) in 2015. The program aimed to promote EV adoption and incentivize manufacturers to build EVs in India. In the first phase of FAME, the government provided USD 130 million in subsidies to support the purchase of electric two & three-wheelers, hybrid cars, electric cars & buses.

FAME’s second phase is a considerable upgrade to USD 1.4 billion of EV subsidies, of which about 85% was earmarked for purchasing subsidies & 10% for charging infrastructure. It started in 2019 and was intended to run until 2022 but has now been extended till 2024.

India needs about 400,000 charging stations to meet the requirement for two million EVs that could potentially ply on its roads by 2026. To cater to this huge demand, an integrated work approach between the private sector and public sector is required.

India’s 2030 vision of e-mobility, which states 70% of all commercial vehicles, 30% private cars, 40% buses and 80% two & three-wheeler sales to be electric, translates into 102 million EVs.

Over the last four years, the E-Car sales have been driven by two players, namely Tata Motors and Mahindra, which together account for 80% of the total market. Key players in the electric 2-wheeler market in India are Hero Electric, Okinawa, Ampere & Ather. In January 2020, Ather announced intentions to build a 400,000 sqft factory in Hosur, Tamil Nadu, which would have an annual output of 1 lakh units. Currently, the company operates one manufacturing plant in Bangalore, which has a capacity of 25,000 units. In December 2020, Ola Electric inked an MoU with the Tamil Nadu government for an investment of Rs 2,400 crore to set up its first factory in the state. It sold 60,000 units in the first 24 hrs. Ola also revealed plans to invest $2 billion in the next five years to build an electric two-wheeler charging network along with its partners.

India’s 2030 vision for electric mobility presented by NITI Aayog is a mammoth market opportunity. The electric vehicle market in India is poised to emerge as the leading market in the world and it might be over $200 billion by 2030.

The growing electric vehicles market in India, which is minuscule when compared to the global market, is seeing many big corporates & foreign players entering the battlefield. Ola is the latest to unveil its offerings. Tata dominates the scene with its Nexon EV accounting for 64 per cent of EV car sales in the country.

The sale of electric cars rose sharply last year to total 5905 from 2814 in the previous year with Tata Nexon EV accounting for 64 per cent sales, while the sale of three-wheelers jumped from 88,378 to 140,683 in 2020-21 as many states including Delhi pushed for the switch from petrol vehicles to electric to tackle pollution issues.

Companies like Amazon, Swiggy, Zomato and Flipkart are deploying EVs for deliveries.

There are 4 critical factors that will drive EV penetration in India over the next decade: Policy, Charging Infrastructure, Battery Cost & Supply Chain Localization.

India is on the cusp of the greatest disruption in its automotive history. And it needs a clear and unambiguous target to set the pace for all stakeholder actions to coalesce around this common goal.

According to a survey conducted by Autotech firm CarDekho & Omnicom Media Group, 66% of customers are willing to buy electric vehicles, out of which 53% said they were strongly inclined to go electric.

The pace of segment-wise adoption of EVs is not uniform. 2 & 3-wheelers lead the race, followed by fleet cabs. For 4-wheelers, parity is expected to be achieved beyond 2025. These adoption numbers depend on factors such as availability of charging infrastructure, financing ecosystem, battery prices & customer awareness.

Conclusion:

EVs are on course to dominate as a game-changer for the Indian automobile industry, with 2W & 3W auto segments leading. As per the announcement by the Union Minister for Road Transport and Highways Nitin Gadkari, electric vehicles have an excellent chance for mass adoption. The EV industry’s hope for promotion at the governmental level has gone up.

While there is a vision for 100% electric vehicles by 2030, most industry experts indicate that around 40-45% EV conversion by 2030 is a realistic expectation. India has a long way to go. 2022 is expected to be a defining moment for EVs in India. Most major automobile players are launching electric vehicle models. Foreign carmakers are eager to get a shot at a market of more than 1 billion people. The government, meanwhile, is eyeing a big game about decarbonizing transport while pursuing ‘Make in India’ ambitions.